China’s Evolving Role In Global Clean Energy Finance: A Shift Toward Diverse And Sustainable Investments – IEA Report

China has become a major force in global energy finance, especially in emerging market and developing economies (EMDE). Since 2015, it has invested more than USD 55 billion on average each year in energy projects in these countries. This level of support is significant because EMDE outside China receives only 18% of global clean energy investments, despite representing the majority of future energy demand. China’s involvement has been central to global energy development, but the way it provides financial support is changing. The country is moving away from a system dominated by state-led debt toward a more diverse and competitive model.

Traditionally, China’s international energy finance was led by two large state-owned policy banks: the China Development Bank and the Export-Import Bank of China. These banks provided large, long-term loans, mostly supporting major infrastructure and fossil fuel projects. This approach enabled host countries to access fully financed projects with minimal upfront costs. However, in recent years, this kind of lending has sharply decreased. From a peak of over USD 115 billion in the mid-2010s, annual commitments fell to about USD 28 billion per year between 2022 and 2024. This change reflects a more selective approach to risk and a strategic shift toward financing clean energy projects.

As lending from policy banks has decreased, other state-led actors have stepped in to fill the gap, creating a more commercially driven financing environment. State-owned enterprises (SOEs), commercial banks, and specialized investment funds are now taking a larger role in financing energy projects abroad. These entities are moving beyond traditional sovereign loans, increasingly using equity investments, joint ventures, and risk-sharing mechanisms. For example, the Silk Road Fund now provides equity capital to support long-term infrastructure projects, while the insurance provider Sinosure offers green underwriting to reduce risks for commercial lenders. These innovations allow projects to attract a wider set of investors and ensure financial sustainability.

China’s shift has major implications for the global clean energy transition. Its official financing is now almost entirely focused on clean technologies, including renewable energy, grid infrastructure, and electric transportation. Between 2015 and 2024, China committed USD 230 billion to clean energy and infrastructure projects abroad. Several recent projects demonstrate how this new model works in practice. In Uzbekistan, a 1-GW solar project was made financially viable through a syndicate of Chinese banks using Chinese yuan, which helped reduce interest rate risks. In Indonesia, a waste-to-energy plant combined local-currency debt with insurance from Sinosure, reducing financial risk and enabling successful project execution.

Despite these opportunities, challenges remain for EMDE. The reduction in large-scale policy bank lending means fewer fully financed project packages are available. As a result, host countries now face a greater responsibility to develop “bankable” projects, with clear revenue models and strong regulatory frameworks. Countries must create enabling environments to attract China’s evolving and more competitive capital. Success will depend on their ability to prepare projects that meet the standards of risk-sensitive investors, ensuring long-term financial and operational viability.

Overall, China’s transition to a more diverse and clean-energy-focused financing model offers a significant opportunity for emerging economies. By shifting from large policy bank loans to a mix of equity, joint ventures, and risk-sharing instruments, China is supporting global clean energy development while encouraging EMDE to strengthen their project preparation and regulatory systems. This new approach provides a critical pathway for these countries to achieve both climate goals and sustainable development. China’s financial strategies are evolving, but its role as a key partner in energy and infrastructure development remains central to the global energy transition.